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McDonald’s faces risk of mass shutdown in Russia as checks spread

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The opening of McDonald's Pushkinskaya restaurant in 1990 was a symbolic event in the ending of the Cold War. It was closed Wednesday.ALEXANDER NEMENOV/AFP--Getty Images

McDonald’s Corp (MCD) is facing a possible mass shutdown of its restaurants in Russia in what appears to be a thinly-veiled retaliation at U.S. sanctions on the country for its role in stoking the Ukrainian conflict.

Russia’s consumer protection bureau Rospotrebnadzor said Wednesday it would temporarily close four restaurants in prime locations in Moscow after finding violations of sanitary regulations, and a host of regional administrations from Siberia to Krasnodar on the Black Sea–home to the winter Olympic host city of Sochi–followed suit on Thursday, telling local media they would launch mass inspections within days.

The news agency Interfax, however, quoted deputy Prime Minister Olga Golodets as saying there was no “total plan” to shut down the company’s 430 outlets in Russia.

Rospotrebnadzor gave no details about what exactly it had discovered at the restaurants and no-one there could immediately be reached for further comment Thursday.

Whatever the reasons, the ban comes at a bad time for the company, which has just seen its operations in China and Japan badly disrupted by a food safety scandal at one of its suppliers.

The restaurants closed Wednesday include the one just off Pushkinskaya Square less than a mile away, which is the company’s oldest and busiest branch in the country, whose opening 24 years ago was a symbolic landmark event at the end of the Cold War. The Pushkinskaya branch alone serves over 12,000 customers and clears nearly $100,000 every day, the newspaper Kommersant cited one ex-employee as saying. It estimated the total daily turnover of the restaurants closed at 5 million rubles ($138,000).

McDonald’s said in a statement that “we are looking at the substance of the allegations to work out what measures are needed to open our restaurants to visitors as soon as possible.”

It made no reference to the political backdrop and said “we will continue to take care of our employees and do everything possible to continue our company’s successful work in Russia.”

McDonalds had described Russia as a key market in 2013, one of few in Europe where it was able to grow revenue and profit. It has doubled its chain of restaurants there in the last five years.

Russia has been taking selective action against the U.S. and European food industry since the imposition of broad sanctions against Russia’s state-owned banks and restrictions on the sale of sophisticated equipment to its key oil industry.

However, Moscow had rowed back on a ban of many food imports Wednesday, appearing to acknowledge that it couldn’t replace some more complex food products on its own. As such, it will still allow imports of lactose-free milk and products, biologically active supplements, flavor additives and protein concentrates, as well as salmon and trout fry and seed potatoes and onion seed.